January 30, 2023
Two weeks ago, the Senate Committee on Labor & Commerce approved SSB 5286, which would make changes to the paid family and medical leave (PFML) program premium rate structure. As I noted at the time, in the near term, premium rates under the bill would be higher than expected under current law in order to build up a reserve for the program.
But the legislative task force on paid family and medical leave premiums had recommended that money from the general fund–state (GFS) be used to seed the reserve, which would lessen the impact on premium rates. The current budget appropriates $350 million to the family and medical leave insurance (FMLI) account, but the budget specifies that it may only be used to the extent necessary to keep the account out of deficit at the end of the current biennium. (Gov. Inslee’s proposed 2023 supplemental would reduce the $350 million appropriation to $80 million.) The legislative task force had recommended that, after covering any deficit, the remainder of the $350 million should seed the proposed PFML reserve.
Last week, an updated fiscal note for SSB 5286 was posted. It includes an estimate of what the premium rates would be if SSB 5286 is enacted and the Legislature allows the program to use the $350 million for a reserve. The chart compares the estimates. With the seed money, the premium rate under SSB 5286 is estimated to decrease to 0.76% in 2024 and then increase to 0.91% in 2025. Without the seed money, the rate under SSB 5286 would increase to 0.90% in 2024 and 0.97% in 2025.
Even with the seed money, estimated future premium rates are well above the premium levels expected when the PFML program was enacted. But after just a few years at the lower initial rates, the program has experienced multiple periods of cash deficits. We wrote about the issues in a policy brief last year. The Employment Security Department (ESD) reported last week that the December ending balance for the FMLI account was -$18.5 million. ESD expects that deficit to grow to about -$80 million by the end of this month. The next deficit is expected to last from late February through April.Categories: Budget , Employment Policy.